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Europe's Diversity Advantage

(originally published by Booz & Company)

American management theorists frequently dismiss Europe as an economic backwater. Look, for example, at Lester C. Thurow's 1999 book Building Wealth. Tightly argued and powerfully put, as you would expect from the noted economist and former dean of MIT's Sloan School of Management, the book nevertheless has one notably glaring blind spot: Europe. To Professor Thurow, Europe is a gifted child that refuses to take full advantage of its talents.

In fact, Europe has a secret weapon in the fluidity with which people of many nationalities, speaking many different languages, move across national borders. Some Europeans even refer to this as Europe's "diversity advantage" — an advantage that Mr. Thurow and other American critics of European competitiveness miss entirely.

Trouble is, if you discuss diversity in the United States, the conversation is quickly mired in talk of racial divides. But "diversity" in Europe has an entirely different meaning — it's a cultural, not a racial, issue. It is no accident that the major thinkers on managing cultural differences are European — most notably, Geert Hofstede and Fons Trompenaars. American commentators have yet to fully catch on.

Getting along with other cultures is axiomatic to the modern European experience in the core of the European Union — France, Germany, Italy, Spain, Belgium, the Netherlands, the United Kingdom, Ireland, Sweden, and Denmark. In EU countries, there is a broad consensus of tolerance and of social democratic government policy.

This is not to say that all is sweetness and understanding. It is not. Still, diversity is the norm. The melting pot is alive and well, and there is no need to travel to Ellis Island. Take a walk down the Kings Road in London or Sveavagen in Stockholm. Europeans typically live in countries where 15 to 25 percent of people have foreign backgrounds.

Clearly, this capacity to accept and work with people from diverse cultures is a powerful business weapon, as effective international teamwork is increasingly a prerequisite for success. If you are used to working that way, things are made a little easier.

Indeed, Europe has a distinct edge over the U.S. Professor Thurow argues that American hegemony is based on flexible labor laws and the willingness of Americans to work more hours. Others throw in the American capacity for entrepreneurialism. But few commentators identify the American ability to thrive and do business in alien cultures as a prime asset. A culture built on individualistic foundations seems to have embraced the wisdom of international teams with distinctly limited enthusiasm. And that's a pity.

Now a new generation of European companies is emerging that takes diversity as a fact of life rather than an imposition. Its leaders include companies like Nokia, EasyJet, Ryan Air, Icon Medialab, and SprayRazorfish. American pundits will no doubt continue to be skeptical about European business performance. But to sustain their arguments, they will have to work harder to see beyond American cultural biases.

Stuart Crainer,
Stuart Crainer is a U.K.-based business journalist and a contributing editor to strategy+business. Mr. Crainer is author and editor of numerous management books, including the Financial Times Handbook of Management (Financial Times Prentice Hall, 2001) and The Management Century: A Critical Review of 20th Century Thought and Practice (Jossey-Bass, 2000).
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